© 2008 Dearborn Real Estate Education

Title Insurance for Real Estate Professionals, 2nd Edition

by Jeanine W. Johnson

© 2008 Dearborn Real Estate Education

CHAPTER 1

BASICS OF TITLE INSURANCE

“What do Title Insurance Companies do?”

© 2008 Dearborn Real Estate Education

• Discuss how title insurance indemnifies• Explain the bundle of rights• Summarize components of real estate• List and explain government rights in land

LEARNING OBJECTIVES

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KEY TERMS

Look at the list of Key TermsCheck off any you do NOT recognize

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Title insurance companies Title insurance companies

"insure” "insure” ““title” to title” to

““real property” real property”

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““Insure” Insure” $$$$$$$$$$$$

To indemnify by providing To indemnify by providing monetary reimbursement monetary reimbursement

for lossesfor losses

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““Title” Title”

The rights of ownership The rights of ownership in real propertyin real property

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“Real Property” and its various components

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“Real Property components”

1. SURFACE

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“Real Property”

2. SUBSURFACE

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3. AIR SPACE

“Real Property”

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4. RIGHTS

“Real Property”

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Real Property includes “Improvements”

Attachments to real estate intended to be PERMANENT

Examples: houses, fences, driveways, trees, bushes…

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Real Property Includes “Fixtures”

Attachments to improvements that become part of the real estate.

Examples:Heating, Plumbing & Electrical Fixtures

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• Trade Fixtures used in a business or trade (usually when leasing.)

• Emblements, or farm crops, can be sold separately from the land.

Exceptions to fixture rule

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Chattels

Personal Property, i.e.EVERYTHING that is NOT real estate

Examples: Furniture,

Vehicles, Stocks, Bonds

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Chattels

Include

Cash, Contracts, Purchase

Agreements

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Modular Housing Real or Personal Property?

Is it attached as an improvementand taxed as real property?

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RIGHTS, TITLE AND INTERESTS

Certain Rights always belong to the Government

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Government Rights

1. Police Powers

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Government Rights

2. Eminent Domain

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3. Taxation

Government Rights

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Government Rights

4. Escheat

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HIERARCHY OF GOVERNMENT RIGHTS

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Federal Government is highest, followed byState followed byCounty and then Municipal

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PRIVATE RIGHTS IN LAND

are often discussed in terms of a “bundle of rights”.

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Title insurance can insure almost any estate in real property-

fee title, a mortgage, a land contract,an easement...

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Three AreasTitle Companiesexamine to reduce risk

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CONSTRUCTIVE NOTICE

the rights shown by the public record.

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ACTUAL NOTICE

when something can be

observed, heard or sensed.

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RIGHTS AS CONSEQUENCE OF LAW

Unrecorded documents, grantors under legal age, fraud, forgery, duress, insanity, incompetency, unknown heirs, undisclosed marriage, identity theft…

© 2008 Dearborn Real Estate Education

REVIEW QUESTIONS